States Meeting Transcript - 13th December 2016

STATES OF JERSEY

OFFICIAL REPORT

TUESDAY, 13th DECEMBER 2016

COMMUNICATIONS BY THE PRESIDING OFFICER ......................................3

1. The Dean, The Very Reverend Bob Key, B.A. – relinquishment of position:............3 The Deputy Bailiff :............................................................................3 The Very Reverend R.F. Key, B.A., The Dean of Jersey:......................................3

PUBLIC BUSINESS..............................................................................3

2. Draft Budget Statement 2017 (P.109/2016)..............................................3

2.1 Senator A.J.H. Maclean (The Minister for Treasury and Resources):....................4

2.2. Draft Budget Statement 2017 (P.109/2016) - amendment (P.109/2016 Amd.).........13

1. Deputy R. Labey of St. Helier:..........................................................13
2. Senator A.K.F. Green: ..................................................................17
3. Connétable S.A. Le Sueur -Rennard of St. Saviour:.....................................19
4. Connétable M.P.S. Le Troquer of St. Martin:...........................................19
5. Deputy A.D. Lewis of St. Helier:.......................................................21
6. Connétable C.H. Taylor of St. John : ....................................................23
7. Senator S.C. Ferguson:.................................................................24
8. Deputy J.M. Maçon:....................................................................25
9. Deputy K.C. Lewis of St. Saviour:......................................................25
10. Deputy J.A. Martin of St. Helier:....................................................26
11. Deputy G.P. Southern : ..............................................................27
12. Deputy M. Tadier of St. Brelade:....................................................29
13. Deputy A.E. Pryke of Trinity : .......................................................35

LUNCHEON ADJOURNMENT PROPOSED..................................................36 LUNCHEON ADJOURNMENT................................................................36

14. The Connétable of St. Brelade:......................................................36
15. Deputy S.M. Brée of St. Clement:...................................................39
16. The Deputy of St. Peter:.............................................................40
17. Deputy T.A. Vallois of St. John : ....................................................41
18. Connétable J.M. Refault of St. Peter:................................................42
19. Senator A.J.H. Maclean:.............................................................43
20. Deputy M.J. Norton of St. Brelade : ..................................................47
21. Senator I.J. Gorst : ...................................................................48
22. Deputy M.R.Higgins:...............................................................50
23. Connétable J. Gallichan of St. Mary:................................................50

24. Deputy R. Labey :....................................................................51

3. Draft Budget Statement 2017 (P.109/2016): second amendment (P.109/2016 Amd.(2)) ...........................................................................................53

Deputy R.J. Renouf of St. Ouen:..............................................................53 Senator A.J.H. Maclean:......................................................................53 Deputy M. Tadier : ............................................................................54 The Deputy of St. Ouen:......................................................................54 Deputy G.P. Southern :........................................................................55 The Connétable of St. John:..................................................................55 Senator A.J.H. Maclean:......................................................................55 2.3.1 The Deputy of St. Ouen:................................................................57

4. Draft Budget Statement 2017 (P.109/2016): second amendment (P.109/2016 Amd.(2))

– amendment (P.109/2016 Amd.(2)Amd.)..............................................62

2.4.1 Senator A.J.H. Maclean (The Minister for Treasury and Resources):...................62

5. Draft Budget Statement 2017 (P.109/2016): Second Amendment (P.109/2016 Amd.(2))

– as amended............................................................................62

1. Senator A.J.H. Maclean:................................................................62
2. Deputy A.D. Lewis :....................................................................65
3. Deputy S.M. Brée:......................................................................66
4. Senator P.F.C. Ozouf :..................................................................67
5. The Connétable of St. John:............................................................71
6. Deputy G.P. Southern :..................................................................71
7. The Deputy of St. Ouen:................................................................72

ADJOURNMENT................................................................................75

[9:31]

The Roll was called and the Dean led the Assembly in Prayer. COMMUNICATIONS BY THE PRESIDING OFFICER

1. The Dean, The Very Reverend Bob Key, B.A. – relinquishment of position:

The Deputy Bailiff :

I am asked by the Bailiff to announce that the Dean, the Very Reverend Bob Key, has been given permission by Her Majesty the Queen to relinquish his position as Dean of Jersey. This will be effective as from 28th February next year. He is leaving to take up a position as a part of the Archbishops' Evangelism Task Group helping as an advocate between cathedrals and larger churches for the beacon events as part of a national initiative, Thy Kingdom Come 2017. He will also be taking up an invitation from the Bishop of Bath and Wells to be part of a team taking forward that diocese new strategy for mission and evangelism. Although we will miss him in this Assembly I know Members will want to join me and the Bailiff in congratulating the Dean on these new appointments. Fuller tributes will be, of course, made nearer the time. A similar statement has been made this morning by the Right Reverend Trevor Willmott, the Bishop of Dover. [Approbation]

The Very Reverend R.F. Key, B.A., The Dean of Jersey:

I am not sure if the foot stamping was in celebration of my departure or congratulations. I shall take it as the latter and thank Members for their amazing support and welcome over the last 11 years.

PUBLIC BUSINESS

2. Draft Budget Statement 2017 (P.109/2016) The Deputy Bailiff :

Thank you, Dean. We now resume or come on, I should say, to Public Business. The first item is the Draft Budget Statement 2017 (P.109/2016) lodged by the Minister for Treasury and Resources and I ask the Greffier to read the proposition.

The Deputy Greffier of the States:

The States are asked to decide whether they are of opinion (a) to approve, in accordance with the provisions of Article 10(3)(a) of the Public Finances (Jersey) Law 2005, the estimate of income from taxation during 2017 of £651,600,000 as set out in Summary Table A of the Budget Statement, with the sum to be raised through existing taxation measures and the proposed changes to income tax, impôts duty, stamp duty, land transactions tax and vehicle emissions duty for 2017 as set out in the Budget Statement; (b) to approve, in accordance with the provisions of Article 10(3)(d) of the Public Finances (Jersey) Law 2005, a capital head of expenditure for each of the capital projects for States funded bodies to be started or continued in 2017 (other than States trading operations) as set out in the recommended programme of capital projects in Summary Table C totalling £65,209,000; (c) to approve, in accordance with the provisions of Article 10(3)(e) of the Public Finances (Jersey) Law 2005, each of the capital projects that are scheduled to start during 2017 in the recommended programme of capital projects for each States trading operation, as set out in Summary Table D that require funds to be drawn from the trading funds in 2017; (d) to refer to their Act dated 8th October, 2015 in which they agreed that in 2017 a net transfer of up to £50.273 million from the Strategic Reserve Fund made up of a transfer up to £70.273 million from the Strategic Reserve Fund to the Consolidated Fund for measures identified in replacement Table

2 of page 6 of P.76/2015 (as amended) and a £20 million transfer from the Consolidated Fund to the Strategic Reserve Fund as detailed in the same table; and to agree that this approval can be varied and to agree for 2017 – (i) the transfer, in accordance with the provisions of Article 4(3) of the Public Finances (Jersey) Law 2005, of £55.273 million from the Strategic Reserve Fund to the Consolidated Fund to meet the measures as identified in Summary Table E; and (ii) the transfer, in accordance with the provisions of Article 4(2) of the Public Finances (Jersey) Law 2005, of £5 million from the Consolidated Fund to the Strategic Reserve Fund; with the resultant net drawdown from the Strategic Reserve Fund in 2017 remaining at £50.273 million the same as approved by the Assembly in the aforementioned Act.

2.1 Senator A.J.H. Maclean (The Minister for Treasury and Resources):

I am afraid I am going to be a little longer. We are seeing unprecedented change across the world, change that will bring challenges but also opportunities. Global growth was 3.2 per cent in 2015, the slowest since the financial crisis. The International Monetary Fund forecasts that global growth will remain modest. Advanced economies grew by 2.1 per cent in 2015 while emerging economies grew by 4 per cent. This was the fifth consecutive year that growth in emerging economies slowed. Growth in global trade has also slowed in recent years to a rate well below its pre-crisis trend. Jersey, of course, is not and will not be immune to the dramatically changing political, regulatory, social and economic trends emerging globally but we are in a better place than most to respond and unlike others are prepared to take the difficult and sometimes unpopular decisions needed to plan ahead for not only the medium but the long term as well. Jersey has a long, proud history with a culture for embracing change, for innovating and for encouraging entrepreneurship. The Government has a clear plan to navigate through the uncertain times we face and Budget 2017 builds on that plan as part of a longer term vision. We know that a strong economy is essential to maintaining sustainable public finances and that a reformed and modernised public service provides the solid foundations to deliver quality public services in an affordable way. The questions for Members today are these: are we going to maintain the steady course we have started that will secure our public finances and long-term future or are we going to allow complacency and short-term self-interest divert us from our goals? There has been much misinformation, doom and gloom about the state of Jersey's public finances, the performance of this Government and the economy. Today I stand to put the record straight. Before the U.K. referendum result Jersey's economy was performing much better than had been expected. Following growth of 5 per cent in 2014, which was higher than anywhere else in Europe, our economy grew in 2015 by 2.2 per cent which was more than double forecasts which is perhaps an indication of our more prudent approach to forecasting. The Fiscal Policy Panel have stated that the impact of Brexit is still very uncertain

and it is likely to remain so at least until negotiations are complete. [9:45]

They comment that the Jersey economy appears to have been relatively buoyant in the first half of 2016 but as a result of the uncertainty around Brexit they downgraded their G.V.A. (Gross Value Added) growth figures to show G.V.A. growth for 2017, 2018 and beyond as flat. The Income Forecasting Group with its 2 independent members have taken these updated economic assumptions together with in-year data from the Taxes Office and updated their June income projections. They now estimate that income tax receipts will be £4 million higher in 2016 but £6 million lower in each of 2017, 2018 and 2019, falling to £9 million lower by 2020. To put that into context it relates to 1.6 per cent less than the June 2016 forecast. Productivity fell slightly in 2016 by 0.2 per cent mainly as a result of a fall of 4 per cent in financial services sector. This was mainly due to falling profitability in banking, largely as a consequence of the sustained low interest rate environment. However, of positive note was that non-finance sectors saw productivity increase by 3 per cent, continuing a trend for these sectors. Of course, raising productivity is the central

long-term economic challenges for all governments, including Jersey, and is a core element of the Strategic Plan. The Council of Ministers is investing and improving productivity throughout the whole economy and introducing policies to optimise economic growth. To this end we are creating jobs in the technology sector with a focus on FinTech. We are working to improve barriers to running a business in Jersey. We are developing new and challenging strategies for enterprise, innovation and inward investment. We are developing a new competition framework to actively promote a more competitive economy. We are adopting environmental management principles to attract environmental businesses. We are enhancing and delivering the financial services framework. We are reviewing and upgrading the Skills Strategy. We are targeting migration that delivers the greatest economic and social gain. We have invested in Jersey Finance, Jersey Business, Digital Jersey, Locate Jersey to support our economic objectives. We have also invested in creating Visit Jersey and are seeing the results with an increased performance with tourist visitor numbers improving. We have allocated £13.5 million over the next 3 years to boost initiatives through the economic and productivity growth facility. A strong economy and a growing economy supports jobs. Total employment in June was 60,320, the highest on record, and 2.1 per cent higher than a year ago. We had 190 more people working in financial services in 2015, 320 more in construction building new offices and homes and 560 more in private sector health and educational services providing care and related services. As a result, private sector employment was 3.1 per cent higher than a year ago but by contrast public sector employment was 3.8 per cent lower than in June 2015. This was the second consecutive annual fall in public sector employment and demonstrates the progress being made with public sector reform as we reduce costs, redesign services and target expenditure to areas of most need. But make no mistake, the pace and scale of reform needs to continue. Indeed, it needs to accelerate. Returning to the jobs market; unemployment is falling. Last month 80 fewer people were out of work than the previous month and 180 fewer people were out of work than a year ago; 186 people started Back-to-Work supported jobs in November; 67 per cent of the jobseekers who started work through JobsFest in October have been kept on by their employer and just under half have been offered a permanent contract. These people are having their lives turned around by meaningful employment opportunities. Congratulations to the Minister for Social Security and her department for the initiatives that have been put out in that area which have been very successful. Many workers are better off with their wages going further as average earnings increased by 2.1 per cent in a year to June 2016, the fourth year in a row earnings increased faster than headline inflation. Indeed, the low inflation we have seen since 2013 has contributed to the sustained growth in real earnings, as have lower prices for things like oil and food. However, this period of very low inflation is probably coming to an end. As a result of Brexit the Sterling Exchange Rate Index at the beginning of December was nearly 20 per cent below its value from the previous year. While this is good for exporters if it continues we are likely to see imported inflation and with it some higher prices of goods and ultimately services. It should be added that commentators are not forecasting a runaway inflation, more a return to more normal levels. With this return to low or perhaps moderate inflation the drive to improve competition in the Island is even more essential. I am therefore greatly encouraged by the approach of the new regime and our competition regulator, C.I.C.R.A. (Channel Islands Competition and Regulatory Authorities). A successful economy needs a highly skilled workforce. We have increased by £2 million the £10 million of means-tested funding for higher education but we recognise that there are more students wanting to access higher education than can afford to do so. We recognise the need to do more to support our brightest and most ambitious students, not least because of the benefits a highly skilled local workforce offers in managing migration and the positive effects it brings to our economy. There has been much comment on the lack of schemes in the Island to allow our students to mortgage themselves up with up to £40 million or more of debt as they go through university. It can be a heavy burden for any young person to take on. Equally, the cost for the States to replicate the U.K. loan scheme, for example, would require sizeable budgets to write off the level of significant debts that would likely emerge. Nevertheless, as well as continuing to ensure that we have exhausted all possible avenues available for affordable loan schemes we are working with the Minister for Education and his department to explore a range of more affordable options, including building on and expanding some existing initiatives, such as private and public sector bursary schemes. I hope to provide more detail in the coming weeks. Ensuring public safety is vitally important. In this regard it is very encouraging that recorded crime fell by 2 per cent in the last year and by 23 per cent during the last 5 years. This is testament to the hard work of the Minister for Home Affairs and her drive for investment in our excellent police force and their hard work and dedication in fighting and deterring crime. Next year the police move to a new state-of-the-art police headquarters that will lead to greater efficiency and increased productivity. The move coincides with transforming service delivery including the use of high tech and mobile data allowing records to be made at the point of incident once and once only. The largest area of public expenditure is of course health and social services, almost £208 million in 2017. Increasing investment in our health services is critical, especially with an ageing demographic. There is a significant amount of specialist equipment to support the provision of care and this equipment has to be maintained and replaced. As technology advances new equipment and treatments are also introduced to improve patient safety, care and efficiency. In 2017 £3.1 million will be invested in replacing and maintaining essential equipment throughout health and social services. Health services are changing in many areas to improve efficiency and service delivery. Our out-of-hospital services are avoiding unnecessary admissions and enabling faster patient discharge. More people are being treated at home and Health are recruiting more staff to run community services. Staff vacancies are also being filled with qualified home-grown nurses. We have reduced waiting times at the Child and Adolescent Mental Health Service. There has been a 50 per cent drop in no-shows in the Physiotherapy Department. Our latest health profile found we have a high life expectancy. Our average life satisfaction scores are higher than most countries. After incredible dedication and unwavering determination by the Minister for Health and Social Services and his team we now have agreement on a site for development of a new hospital to deliver the quality health care that our community rightly expects and we have a credible funding solution for building it which I hope Members will support early next year. Turning to another important area: housing. Our policies to increase and improve the affordable housing stock are helping Islanders and the work goes on.

Good quality and affordable housing is essential and the Minister for Housing and her team, working collaboratively with Andium Homes, has been doing a superb job. Deposits for more than 3,500 tenants have been protected in the first year of the States approved Tenancy Deposit Scheme. A new Landlord Accreditation Scheme is helping tenants and we have transformed social housing. Andium Homes have built 44 new homes at Lesquende. Ceasarea Court is being refurbished. Planning applications have been approved at La Collette Low Rise, Le Squez and Summerland's site transfer. Andium is planning to build 1,000 new affordable homes by 2020 and will sell 300 homes to first-time buyers in the next 5 years. In just one development 200 new affordable homes at Samarès nursery site in St. Clement, 40 3-bedroom homes will be available to buy for first-time buyers through the Andium Home-Buy Scheme and 160 social rented homes will be bought by Andium to add to this portfolio. We are working with all the social housing providers, including Jersey Homes Trust and Christians Together in Jersey, to improve supply. Turning now to the package of proposals in Budget 2017. We are building on our long-term tax policy of keeping taxes low, broad, simple and fair. We are cutting taxes on income for low earners. We are helping working parents with the cost of childcare. We are improving equity between families and encouraging investment growth and job opportunities for our young people. At the same time, in accordance with our policies, we are proposing to increase duty on tobacco, alcohol and fuel which damage health and the environment and costs us money. We want to increase stamp duty for homes costing more than £3 million and also introduce a new higher band for properties costing

more than £6 million. We are asking for more information from all companies taxed at the zero per cent rate. This data will inform future policymaking and help us find ways to broaden our Zero/Ten corporate tax base and potentially introduce tax on larger companies trading in Jersey. I would like to spend a moment on the fairness of our tax system about which there has been much debate.

[10:00]

Fairness is one of Jersey's 5 principles of taxation and I am aiming to achieve greater fairness for all Islanders. Some people have expressed concern that the tax burden is falling disproportionately on middle-Jersey. However, one fact is clear. Tax data shows that the top 10 per cent of the highest earners provide over half the personal taxes collected each year to fund services for Islanders. Those on the lowest incomes pay no tax at all. It is estimated that 30 per cent of Islanders do not pay tax. It is also estimated that 45 per cent of pensioners do not pay tax. Of those Islanders that do pay 85 per cent are benefiting from marginal relief and are mostly paying effective rates ranging between 7 per cent and 15 per cent. That is well below the standard rate of 20 per cent. Around 15 per cent of our taxpaying households pay that standard rate of 20 per cent of the tax. Our generous tax free allowances mean that in 2015 the 40 per cent of lowest earning households contribute just 3 per cent of the £354 million of personal income tax raised to fund Jersey's public services. Indeed, tax changes since 2005 have benefited lower income households and increased the tax paid by higher earners. We know tax statistics can be confusing. The Council of Ministers has therefore commissioned a review of personal income tax data. This will help to explain how tax changes since 2007 have affected Islanders. The review of personal income tax has begun and is being overseen by a political oversight group of Ministers and other Members of this Assembly. It will also look at how various tax changes, like G.S.T. (Goods and Services Tax), 20-means-20, increases in tax free allowances and the reduction in the marginal tax rate have affected the income of different kinds of households. We will use the information gathered to help us decide how we can generate a fair and more sustainable income to meet the growing cost of funding public services in the future. In the meantime I am proposing modest changes to improve fairness in the tax system to improve administration and to maintain and, in some cases, increase tax allowances and tax revenues. I will turn now to the specific measures in this Budget, starting with the income tax exemption threshold which might be more accurately called the tax-free allowance. I want working families to take home more of what they earn. Our tax-free allowances are already more generous than in Guernsey and the U.K. Taken together with social security contributions and, contrary to recent speculation, no taxpayer in Jersey is paying more than their counterparts in London. Continuing on the course I set last year the tax-free allowance for single Islanders born after 1951 will increase from £14,350 to £14,550 and for married couples and civil partners from £23,000 to £23,500. This will allow these 2 allowances to

catch up with the age-enhanced allowances of £15,900 and £26,100 respectively, which remain available to older individuals and couples who were born before 1952. If we can continue with this approach in the next 4 Budgets then I expect this Assembly to have achieved a common tax exemption threshold for all Islanders regardless of their age or employment status by 2021. I believe that it is the right course to follow, one which is fundamentally fair. Additionally, for the first time in 17 years I am increasing the second earner's income allowance for spouses and civil partners from its current maximum level of £4,500 to £5,000. This begins to remove the anomaly whereby 2 co-habiting earners can earn more income tax free than married working couples. This effectively gives above-inflation benefits to around 12,000 households and particularly helps lower income families. Jersey knows the value of a healthy and growing business sector and we will continue to maintain a tax structure which encourages investment, growth and the creation of job opportunities particularly for young people. We make legislative provision in this budget to require companies taxed at the zero per cent rate to provide more information to the Comptroller of Taxes to inform future policymaking and to support future work on international tax standards. As I indicated when I lodged this Budget, now is not the time to be creating uncertainty for our business community. I remain committed to maintaining our Zero/Ten regime of corporate income taxation. Zero/Ten was introduced in 2008 across all Crown Dependencies to protect the respective economies. It has not always been popular or indeed fully understood but make no mistake Zero/Ten has been essential to maintaining jobs and a strong economy that ultimately pays for our quality public services. Without its introduction Jersey, Guernsey and the Isle of Man would have seen their respective economies, communities and ways of life devastated. Zero/Ten has protected the 13,000 or more jobs currently in the finance industry in Jersey and the income we receive by taxing the salaries of those employees. Businesses in the financial services sector taxed at 10 per cent contribute around £70 million in corporate tax and £10 million in I.S.E. (International Services Entity) fees to the Treasury each year. However, no taxation system is perfect and we are reviewing the way Zero/Ten works. We want to see whether we can adjust the scope of the 10 per cent and 20 per cent corporate tax rates to generate more income by bringing more companies into those bands. Like Guernsey and the Isle of Man, we need a zero rate to maintain tax neutrality and the competitiveness of our finance industry and to meet the requirements of the E.U. (European Union) Code Group. This rate must apply equally to locally and non-locally owned companies, especially if we want to trade in valuable E.U. markets. We are collecting more information from companies rated at zero per cent tax to inform future discussions about improving our corporate tax system. It is absolutely imperative that this information is collected before changes are considered but I assure Members that Ministers, as well as representatives of the finance industry, are determined that they are delivered. I will consider, therefore, over the coming year the opportunity to ask some larger businesses to contribute through the corporate tax regime following the example of the Isle of Man and Guernsey. We will also review the technical definitions that determine which financial services companies pay tax at the 10 per cent rate and explore the opportunities to extend the scope of those businesses that are taxable. Turning to pensions. Many people are

finding it increasingly difficult to satisfy the rules of drawing-down some of their pension fund. We recognise that rules on minimum retirement income can be difficult to fulfil in the current environment even where people have built up considerable capital within their pension pot. After consultation with industry I am proposing the introduction of a minimum retirement capital test that will make it easier to drawdown a portion of a pension fund in the circumstances that I describe. This will still ensure people have enough resources to fall back on to avoid becoming dependent on the State in the future. I do not believe that further relaxation available in some jurisdictions, notably the U.K., is sensible for Jersey at this time. However, we will keep the matter under review so that we can learn from the experiences of others. Other changes will ensure equity of treatment in the taxation of lump sums from overseas pension schemes ensuring that they are taxed exactly the same as Jersey schemes. Turning to property matters. I have already mentioned the increases in stamp duties for high value residential properties which we do not believe impact on our prospects of continuing to attract these Valuable High Value Residents to our beautiful Island, and I commit to examine in-depth the duty applicable to commercial properties. Furthermore, this Assembly overwhelmingly voted to support the introduction of the States paying rates. Following that decision this budget proposes the legislative changes to bring that decision of this Assembly into effect and also to enable the Parishes to pay Island-wide rates. It also gives the States the power to make regulations to reassess rateable values which have been frozen since 2003. It is unfair that rateable values have been frozen, especially in sectors such as retail where market conditions have deteriorated as opposed to other sectors such as the office market, which has been considerably more buoyant. A revaluation would not raise more revenue but it would rebalance the level of rates chargeable based on up-to-date market data. It is a matter of fairness. Arguably, revaluation should have been included at sensible intervals of every 5 or 10 years at the outset but it was not and we hope to rectify that situation. I will now turn to the matter of duty measures proposed in this Budget. Before I outline them I would comment that it strikes me as difficult proposing duty increases, especially after the Christmas lights have been turned on, and so in future I will be considering whether to ensure that the Budget presentation is made slightly earlier than is currently the case. Jersey is not alone increasing impôts. The Guernsey States have agreed a 5.6 per cent increase in duty on cigarettes, an increase of 8.1 per cent for all other tobacco products. A 2 per cent real terms increase in duty on alcohol and a 5 pence increase in duty on a litre of fuel. If our proposals are supported the retail price of all these products will still be cheaper in Jersey. We are proposing a number of increases to duties for the coming year, all of which signal this Government's ongoing commitment to health, social and environmental policies. We are proposing that the duty on cider and beer should increase by 2 pence. We are calling for an 8 pence increase on a bottle of table wine and the duty on average strength spirits will increase by 72 pence per litre. These above inflation increases acknowledge that high levels of alcohol consumption damage people's health and increase the risk of public disorder. Jersey has one of the highest levels, per capita, of alcohol consumption in Europe with one in 4 drinkers drinking at potentially harmful levels. Now, let us look at a few facts. If we use Jersey figures and U.K. modelling the annual cost of alcohol related harm to Jersey is estimated to be £30 million.

[10:15]

The duty in 2015 was £18.2 million. That leaves £11.8 million shortfall which has to be found from general tax revenue. Furthermore, as the price of alcohol has increased consumption has fallen, a fact borne out elsewhere by numerous studies including those by the O.E. C.D . (Organisation for Economic Co-operation and Development) and World Health Organisation. These reports and local data demonstrate a clear link between higher prices and falling consumption. Likewise, tobacco. The cost of dealing with the effects of smoking far exceeds the duty charged. Based on a U.K. per capita cost of smoking, the annual cost of smoking to Jersey is estimated at £26.5 million. The duty for tobacco was £15 million leaving an £11.5 million shortfall for us to make up. The economic burden that smoking places on our Island society is clearly significant. It includes the direct costs of smoking-related illness, lost productivity and the cost of smoking-related fires. Smoking remains the biggest cause of preventable illness and premature death with tobacco killing half of its users. Price increases have been shown to encourage existing smokers to quit; more so among lower income smokers as well as discouraging young people from ever starting. We are proposing to increase duty on a packet of 20 cigarettes by 45 pence including G.S.T. Hand-rolling tobacco is even more damaging and therefore will be increased by 10 per cent to align its price more closely with that of cigarettes. Our new tobacco strategy aims to move Jersey towards a smoke-free generation and will build on the policy of increasing duties to reduce consumption. Turning to vehicle emissions and fuel duty. Jersey remains committed to meeting the Kyoto targets to protect our natural environment and keep Jersey's air clean for future generations. Last year saw the Assembly agree to significant change and revaluation of our scheme of vehicle emissions duty and accordingly duty is therefore uprated to maintain the real value of revenue receipts and the current levels of incentive for buying newer lower emitting vehicles. In addition a litre of petrol is proposed to increase by 2 pence per litre including G.S.T. Lastly, in terms of impôts and duties I draw Members' attention to the conclusion of the Corporate Services Scrutiny Panel's adviser, C.I.P.F.A. (Chartered Institute of Public Finance and Accountancy) which concludes and I quote: "The proposals for impôts and duty, land transaction taxes appear to match prevailing public policy considerations and along with modest vehicle emission duty changes will provide additional net revenues." Moving on to more practical administrative measures. The Taxes Office now receives more information from banks overseas about Jersey taxpayers' income than it does from Jersey banks about their domestic income. As I announced last year, and after consultation with financial institutions in Jersey, this Budget enables banks and other institutions to

provide similar data to the Comptroller about interest paid by them to Jersey tax residents. Undeclared bank interest was the most common error identified during the last disclosure opportunity which Jersey offered in 1998. This measure will help the Taxes Office to both spot error and evasion sooner so more people can get their tax affairs right the first time. In the longer run, as we further invest in our digital future, we will be able to provide better services to Islanders including, for example, the possibility of pre-populating tax returns with relevant data. The Taxes Office has also just published today its report on how the High Value Resident Regime has been working since the last changes were made in 2011. This regime is a longstanding part of our immigration, inward investment and taxation policy. It encourages high net worth entrepreneurs and other wealthy individuals to become Jersey residents to bring their assets here and to build businesses here. In 2014 34 high value residents paid £4 million of personal income tax and the wider economic benefits of these residents was estimated in an earlier independent report in 2010 to be conservatively between £50 million and £70 million. I am pleased to say that this latest review has concluded that the changes made in 2011 have been successful in attracting a much broader range of high net worth individuals for the benefit of Jersey. My predecessor, Senator Ozouf , should be congratulated on his work in introducing this new scheme. The aim was to encourage more applications from people who could contribute to the strength of our economy through entrepreneurship and by doing so help us to create more jobs for Islanders, improving living standards for everyone. These high value residents not only contribute substantial amounts of tax towards our public services but increasingly support Jersey's economic strength. I remain struck by the significant contribution they make to Island life as a whole, especially in their support of charitable and Parish activities. This review has shown that all the people who came here under the post-2011 regime are meeting their expected annual income tax contribution. Most of those people also contribute significantly to Island life without necessarily seeking publicity for doing so. However, the review has also identified a number of areas for improvement. I want to see future high value residents commit to paying a minimum annual amount regardless of the income they generate and I believe it is time to increase the expected annual income tax contribution from £125,000 set in 2010 to £145,000. I have asked the Taxes Office to develop these ideas over the coming year for consideration by Ministers for inclusion in Budget 2018. This year I bring forward legislation to enable the Taxes Office and the Joint Financial Crimes Unit to exchange data and work more collaboratively, for example, in tackling serious cases of tax fraud and evasion. Next year I will propose a new scheme of sanctions and penalties to improve tax compliance and to enable the Taxes Office to modernise other aspects of its working practices. The Taxes Office remains on track to install new computers which will enable online filing and assessment of taxes for personal taxpayers probably by 2019. If feasible, we will integrate the collection of social

security contributions into the Taxes system in 2020. Moving on to the tax disclosure opportunity. I signalled in my last Budget that the Taxes Office would provide a tax disclosure opportunity in 2017. This will be a one-off opportunity for people to get their tax affairs in order before new data sources, new technology and new legislation make the detection of tax error and evasion easier and before I invite this Assembly to strengthen the penalties and interest charges that may be levied on unpaid tax. The opportunity is available to all Jersey taxpayers who have made errors or omissions. During 2017 the Comptroller of Taxes will begin to receive tax information from the first 40 or so jurisdictions from over 100 that have joined the Multilateral Convention on Tax Matters. Any Jersey tax residents with investments overseas which have not been previously declared to the Taxes Office have a last chance to regularise their affairs during 2017. The disclosure opportunity will run from April to December. After that, new sanctions, penalties and interest charges, which I shall ask the Assembly to adopt in Budget 2018, will begin to apply. A budget, of course, is not all about taxation matters and this Budget proposes £65 million of vital infrastructure investment. We adopt a 25-year planning horizon for the purposes of formulating capital expenditure. The indicative medium term plan covering the period 2016 to 2019 was laid out in the M.T.F.P. (Medium Term Financial Plan) and the total expenditure limits agreed for each year were agreed by

this Assembly. The detailed plan for 2017 is set out in this Budget. The largest item in the capital programme for 2017 is the £39 million funding for a much needed new Les Quennevais School, a project delivered with great skill and determination by the Minister for Education and his team. Significant changes to the capital programme highlighted just over a year ago of firstly the bringing forward of 2018 and 2019 allocations for the vital Taxes Office systems renewal, which I have already referred to. This will transform the way that the taxes system operates and lead to full digital delivery of the personal taxes service. This is made possible by phasing the work on redeveloping the improvements at Grainville School reflecting progress on the delivery of that particular project. The plan still retains £3.26 million of funding so that Grainville School can continue its redevelopment. The other major adjustment is within the Department for Infrastructure where a commercial recycling facility has been prioritised to assist with handling of materials that are currently inappropriately entering the Energy from Waste plant and causing unnecessary and expensive running costs. £6.8 million is also proposed for that department's infrastructure rolling vote and £1.6 million for replacement assets, mostly at the Energy from Waste plant. The Corporate Services Scrutiny Panel makes some interesting observations regarding the capital programme and the need to revise the capital allocation process. The Treasury officers have asked that I record their thanks for a welcome and constructive dialogue with the Corporate Services Scrutiny Panel C.I.P.F.A. adviser during this current review. It is unlikely that Treasury and the adviser will agree on all matters. However, I know the Treasury have benefited from discussions regarding capital allocation in particular and will bring forward proposals accordingly. This Budget supports the Council of Ministers' long term vision for Jersey. The Council of Ministers recognise that building a successful future requires strategic direction and investment over many years. So we are introducing a new approach to long-term planning that reflects international advice and well-established practice. To inform this work a wide-ranging survey gathered views from more than 4,000 Islanders. This showed that Islanders value many aspects of living in Jersey but are concerned about issues such as affordable living, particularly the cost of housing and increasing pressures on our natural environment. Their ambitions for the future often referred to a beautiful, safe and fair Island. Ministers will be using these insights to inform a long-term vision for Jersey that reflects the social, economic and environmental issues that are key to the quality of life here in Jersey and that includes climate change. The impacts of severe weather will present

serious challenge and we must become climate resilient. [10:30]

This is critical both for our own population and to underpin our status as a sustainable economic centre that attracts long-term inward investment that is so critical. We will assess the risks posed by climate change and develop a costed programme of action. Additional funding will be required to ensure critical infrastructure like our sea defences and drainage services are resilient in the future. I am committed to supporting the Minister for the Environment and the Minister for Infrastructure and their departments with the necessary funding to outline the scale of the challenges we face in keeping Jersey a safe, resilient and attractive jurisdiction in which both to live and to do business. In conclusion, Islanders want a government which is forward-thinking, collaborative and innovative. This Government has put a lot of work into developing a long-term vision that will set a path for Jersey to 2036 and beyond. I call that forward thinking. Jersey has little debt and significant reserves. Even if we borrow up to £400 million to build a new hospital, our debt to G.D.P. (Gross Domestic Product) ratio will be no more than 16 per cent. That compares to the U.K. at a staggering 88 per cent, the United States at a staggering 104 per cent and Germany at 21 per cent. We would be using excess income from our Strategic Reserve to fund the loan to build the new hospital, leaving the bulk of our savings in place for the benefit of future generations. At today's very low interest rates which we can lock into, it is cheaper to borrow than to use our reserves to build the hospital. The model shows that the Strategic Reserve would be worth

£3.6 billion by 2057 after the £400 million capital and all interest has been repaid. To fund the hospital in this way does not importantly require any taxpayer contribution, providing we can secure borrowing in the form of a fixed rate sterling bond at current low interest rates. Our investments have performed well. The Strategic Reserve has grown by 12 per cent in 2016 and stands at £866 million at the end of October. The most recent returns of our Common Investment Fund where our cash is pooled and invested has also grown. The return on the fund so far this year has been 13.91 per cent. This has significantly outperformed our long-term expectations and reflects unusually positive market conditions. But we have a firm financial plan and a proven track record of fiscal discipline and remaining nimble in the face of rapid change. We will continue to draw on the expert independent economic advice as the local and global outlook changes and we will ensure we maintain enough flexibility in our plans. Some of our decisions have been difficult but they are all focused on keeping Jersey a great place to live and to work. This Budget is in line with our priorities about investing in health, investing in education, investing in infrastructure and improving our housing stock for Islanders. It sustains our focus on reforming the public sector and maintains our aim to make a tax system simple and more equitable. It helps provide the flexibility Jersey needs in an uncertain global economy. This budget will help to keep our Island secure for future generations. I commend this budget to the Assembly.  Thank you. [Approbation]

The Deputy Bailiff :

Is the proposition seconded? [Seconded]

Deputy M.R. Higgins of St. Helier :

Can I ask a point of clarification of the last speaker?

The Deputy Bailiff :

Yes.

Deputy M.R. Higgins:

The Minister in his address told the Assembly that

The Deputy Bailiff :

I am sorry, is this a point of clarification from the Minister? Deputy M.R. Higgins:

It is a clarification, yes.

The Deputy Bailiff :

Well, no, the normal thing is we would move to deal with the amendments and then the debate would resume after the amendments have been disposed of.

Deputy M.R. Higgins:

I will come back with that, thanks. The Deputy Bailiff :

Thank you.

Deputy G.P. Southern of St. Helier :

Could I ask if the Minister has arranged to have a copy of his speech circulated, either electronically or in hard copy, and if he could do that by lunchtime?

The Deputy Bailiff :

I think that is a practical matter rather than a point of clarification. Senator A.J.H. Maclean:

Yes, I have no problem circulating the speech. I cannot commit to doing it by lunchtime but certainly by the end of the day.

Deputy M.R. Higgins:

For a point of information, the speech is online already, and that is what I was going to bring the point of clarification about.

The Deputy Bailiff :

Very well. The proposition is seconded. There are a number of amendments and Members are able to see the proposed running order which has helpfully been provided for us by the Deputy Greffier. There is also lodged a Draft Budget second amendment amendment by the Minister for Treasury and Resources and we will come on to that when we deal with that in due course.

2.2. Draft Budget Statement 2017 (P.109/2016) - amendment (P.109/2016 Amd.) The Deputy Bailiff :

Very well, the first amendment is lodged by Deputy Labey of St. Helier, it is entitled the Draft Budget Statement 2017 - amendment, and I ask the Greffier to read the proposition.

The Deputy Greffier of the States:

Page 2, paragraph (a) after the words "as set out in the Budget Statement" insert the words "except that the estimate of income from taxation during 2017 shall be decreased (i) by £690,000 by increasing duty on all categories of alcohol by the June 2016 R.P.I. (retail price index) figure of 1.5 per cent and not by the percentages proposed in the draft Budget Statement; (ii) by £590,000 by increasing duty on fuel by the June 2016 R.P.I. figure of 1.5 per cent and not by the 4.3 per cent proposed in the draft Budget Statement."

1. Deputy R. Labey of St. Helier :

The longer we go down this road, I think it is a shame that in 2016 with the relatively new Minister for Treasury and Resources, we are still travelling it, because while the revenue it generates is tempting and much-needed, the bad situation it purports to cure will only get worse. These increases will force more people out of the controlled environment of the pub and restaurant with its modest measures and into the home where they will drink more. That is what happens. That is the uncomfortable truth that this Budget refuses to confront. We are fortunate indeed in our lives if alcoholism does not touch us in some way, either ourselves or somebody we love, and I have been up close and personal to it. It did not happen in a pub; it was covert, it was unseen. If it had been happening in a pub we might have got to it earlier and it would have been better. It was bottles hidden around the place which were not that difficult for an 11 year-old boy to find. I must record that with this particular case, the brave and titanic struggle the individual went through to successfully rid himself of this terrible disease. But it was not in the pub, it was covert, it was down the off-licence and it was secretive. So, I do know what I am talking about on this occasion, and it is the hypocrisy of what is in front of us that most irks me on this. It is something that I did not come into politics to continue and it is something that I do not want any part of. Members have been here before, 2 or 3, maybe more times, on this very same debate, and I am sorry to force them through it again, but I would like to try to prove that it is not really my fault. I will not make this too long, and the report accompanying my amendment, from my worst, is the shortest ever, 2 paragraphs and a sentence. The principal paragraph makes that point that what we are doing here, with the best intentions of the Minister for Treasury and Resources, what we will do is force people

out of pubs into the off-licence and home where they will drink more. I have waited every day for the last 3 weeks, I have been online wherever I have been, here or away, to the States Assembly website and I have looked for the Minister for Treasury and Resources' comments on my amendment every single morning because I want to know what he has to say to this point. Of course, it was only yesterday when I rocked up here that that was, late again and on my desk, and we have a bunch of statistics from the Minister for Treasury and Resources and his department trying to refute my amendment. They do not speak, none of them speak to that point I am making, the principal point here, that we are forcing people to drink at home which is more dangerous for them. We get a bunch of statistics about the per capita consumption but all these statistics are highly dodgy. We are a holiday Island. People come to this Island on holiday and when we are on holiday we treat ourselves to drinking a little bit more. Is that factored in? We do not have a large Muslim population here. Is that factored in? Are we treating like with like? We are told that domestic violence is on the increase and drink-fuelled domestic violence is on the increase, and I am sure that is true. But where is the information about where the drinking is occurring before this violence occurs? Is it coming back from the pub or is it through drinking in the home? I am told in the vast majority of cases that it is through drinking at home that it escalates into this violence but where is the information we need to make that decision? Where is the information? The department of the Minister for Treasury and Resources must have it. Okay, if we are consuming too much, where are we getting it from and where are we consuming it? The Minister for Treasury and Resources must know where it goes when it comes to the Island, if it goes to the Co-op or Tescos or the other supermarkets and stores, or if it is going to the pubs and restaurants. Why do we not have that figure before us because I think it would illustrate my point? I am told that about 70 per cent goes to the supermarkets and stores and 30 per cent to the pubs and restaurants. So, we do not have the facts before us but we do have a lot of statistics. As I have said, Members have been here before, Members who have been here longer than me, and they will have heard in the last debate of this kind in 2013, they will have heard the then Minister for Economic Development, Senator Maclean, saying this: "It is my view, and it is certainly my objective to ensure that this is the last such debate. In future, the subject of impôts specifically on alcohol should be resolved as the result of a clear government alcohol strategy. [Approbation] Ministers have been working very closely to try and deliver on an alcohol strategy to help polarise the position because without a clear policy, it is very difficult to move forward." Sure enough, in the following year, in 2014, we did get an alcohol strategy of sorts. It was full of a lot of objectives and actions. It did not necessarily tell us anything new but it was a start. It did not inform the debate on pricing as it was then published in 2014 but it did promise to work on that. It promised a pricing review that will include equalisation of impôts duty. A review of the equalisation of impôts duty: timeframe completion by Q2 2015. Review of the hypothecation of impôts duty: completion by Q2 2015. Review of the control of drinks promotions and pricing incentives: timeframe completion by Q3 2015; the deals you are getting at Tescos, et cetera, and the other supermarkets. There were a whole number of other reviews coming through 2015 and 2016. I have read this strategy and I saw that this was the case. I have asked for the results of those reviews and no answer came for 2 weeks to my emails. I pressed again and, of course, the work has not been done. Or it has been started and it has not been completed. We are where we are again in 2013 where the then Minister for Economic Development said we would not be doing this, and now he is the Minister for Treasury and Resources he would act on an alcohol strategy, a government policy, which if it said: "Right, let us

have inflation-busting increases, then I will bring that to the House" but we do not have that policy. We are back where we were in 2013. I want to touch on a couple of other points that the Minister for Treasury and Resources makes in his comments to my amendment. I think this is slightly scare tactics because he is saying: "Part 1 restricts the increase in alcohol impôts duties to 1.5 per cent decreasing States revenue by an estimated £690,000 [which we know] during 2017." Then he goes on to say "broadly recurring in later years" and with the fuel again "broadly recurring in later years" it now goes up to over £3.9 million.

[10:45]

What does this "broadly recurring" phrase mean because there is nothing about it in my amendment? This is for 2017. The figure of £3.9 million now is screaming out at these comments when really it is £1.3 million. There is nothing to stop the Minister for Treasury and Resources coming back next year in the next Budget with evidence to support an inflation-busting increase in impôts but we are dealing with this year; we are talking about £1.3 million. It is the Minister for Treasury and Resource's responsibility to come up with budget measures that achieve the support of this Assembly. If they do not achieve the support of this Assembly, it is not the Assembly's job to fill the hole, to find a solution, it is the Minister for Treasury and Resource's. That said, in the last year of the States of Jersey Tourism Department, it absorbed a budget of circa £6.3 million. Visit Jersey has an annual grant of £5 million, so the sum that would be raised by the duty increase has already been saved. Visit Jersey is also attracting more visitors and a greater visitor spend. Why make the task of building the visitor economy more difficult? This is the second strand, an important strand to my argument. The fact that we will be drinking more at home is bad for us and the damage, the potential damage to the tourism industry. We have all heard them screaming about it with justification. I think it is crazy to risk pricing ourselves out of the market. All it takes is for a new thread on TripAdvisor about how expensive it is to eat or drink out in Jersey and that could be hugely damaging. Just as the green shoots of tourism are starting to appear, it seems to me a folly to play around in this way with potentially the cost of a meal out for tourists and, not just for tourists, for residents too. In the past, the low-cost drinking supported tourism and the high level of sales provided substantial revenue. Now, the duty-led high prices are a deterrent to repeat holiday visits. Maybe like me, Members have heard visitors are surprised sometimes at the level of money they are paying in certain establishments. If we get this wrong, it could be disastrous. We have seen of course a lot of pubs disappear. We do need to support our industry, we want them to invest in their establishments to bring them up to speed. How is this helping them do that? Why are we not listening to our industries? I put this amendment in because I went to a Budget briefing and, I must say, I was disappointed with it. I thought: "It is the same old, same old. Why are we doing this when it is potentially destructive, does not do what it says on the tin? Why is Senator Maclean going there? I thought we were going to get a new approach." I left the building straightaway and I started work on this and, as I did so, I had an awful lot of people contact me from the tourism/hospitality licensing trade and they do complain about not being properly consulted. They

might get invited to a Budget briefing but by then it is a fait accompli. The gentlemen from the licensing trade some Members listened to last night, let us call them "Mr. Liberation" and "Mr. Randalls", they went by the invitation of the Minister for Treasury and Resources to a Budget briefing in October. They heard the Minister say that the industry had been consulted and they said: "Hang on a minute, you have not consulted us. Ever. Mr. Liberation has been here 8 years in post and he has never been meaningfully consulted before a Budget. Mr. Randalls, I understand, took issue with the figures that the Treasury Department were putting forward, took issue with the fact that he was not being consulted, never had been. The Minister for Treasury and Resources agrees that from now on it is going to be a 2-way street which is progress. Mr. Randalls goes home and writes a 2-page email to the Treasury team and the Minister for Treasury and Resources, very modest, very sensible, arguing about the figures, et cetera, finishing up with: "The industry feel that enough is enough, that maybe this year duty rates are frozen." Again, as I said at the meeting, the proposed uplift in fuel duty will impact on every item delivered in Jersey and every service. The pips really are beginning to squeak. Well that was in the middle of October and he is yet to receive a reply. Now I know that the Minister for Treasury and Resources himself is a busy man but he has a huge team and Mr. Randalls is worth how much to the Treasury? Millions and millions of pounds and he does not even get the courtesy of a reply. This is why people think and say and allege that our government is arrogant because they seem to be shying away continually from meaningful consultation with people who know, industry professionals, before they make their decisions. It is a great shame because you learn so much in a proper process, a meaningful process, about the other side and you come to compromises. So, as I say, I am going to try to keep this as short as I can, and I want to just say, I repeat, on the alcohol impôts increases, it is going to force more people into drinking more because they are going to get it from the offy and they are going to do it at home and it is potentially very, very damaging. I cannot see it in any other way than it is potentially very, very damaging to our tourism industry. So, for the last word on this, I turn to Senator Farnham and his contribution to the debate in 2013, the exact same debate in 2013, in which he says: "The important thing that I ask Members to think about is we have a tourism industry that is very important to us and every time we increase duties over and above inflation or R.P.I. it is just an extra burden. It means that prices have got to go up a little bit. It means that margins are eroded slightly as the pips begin to squeak [that phrase again] in some instances as the duty rises have been quite large for some time with the odd exception. It just means Jersey becomes a little bit less competitive, a little bit less attractive and it is time probably for us to act and show the tourism industry that we do support them and we do want them to grow, we do want them to continue to invest in their businesses and we do consider tourism as a valuable and important part of our community." What a pleasure it is to be able to say that Senator Farnham was right then and he is absolutely right today. The same is true today. On the fuel increases, I just do not think it is the right time to be doing the Minister for Treasury and Resources began his speech talking about the problems with growing the economy and the lack of growth at the moment. I just do not understand how inflation-busting increases in fuel, when we are so dependent on cars on the road in this Island, how that is going to help the situation. I think there is a forgotten generation on this Island who are the indigenous population who have been here since the 1930s and 1940s. They have lived through the occupation, perhaps as children, et cetera, they are in their 70s and 80s now, they have worked - worked - all their lives and paid their taxes, raised their children,  et cetera, and contributed. They, with the best efforts of the Minister for Infrastructure, cannot live their lives as they would like to by using the bus service. It does not reach them. They have earnt the right to use their car, and they like to use their car, and some bright spark in the Treasury is telling those people, that generation, this year: "We have come up with an idea to raise some revenue to fill a hole, you are going to have to pay more for the privilege of driving your car." I think that is wrong. I think that is absolutely wrong. I think that we should

consider and this group does not have a lobby. It does not have a lobby, it does not know how to express itself through the paper and the media. The same with, I guess, "white van man", you could call them, the guy who fixes our roof, or catches the mice, or cleans the carpets or what have you. These guys and women spend their life on the road and they are, a lot of them, self-employed entrepreneurs. I do not know how in touch this Government is with the self-employed. I am sure there are other Members in this Assembly who, like me, have spent most of their career self- employed. All of my career I have been self-employed. I have had long-rolling contracts with the various T.V. (television) companies which was great but when I gave up T.V. in the year 2000 with nothing in front of me and I had to go and find my work in a different area as I wanted to concentrate on writing and directing, it was pretty scary. I began to pick up contracts as a visiting lecturer at drama schools in London which I loved and I was paid X amount to do a 6-week course, direct a play or have your workshop, and I was paid in 2001 X amount. I did this a number of times, perhaps 20, 25 times, throughout the decade, and the amount for the job in 2001 was exactly the same as the amount for the job in 2012 just before I left London to come back to Jersey. With a lot of other contracts, they did not move throughout the noughties but of course the cost of living slightly does, overheads do, there are increases. I think there are a lot of people who have pegged what they are getting in, they have to remain competitive, but this Government is now saying what they have to spend, the cost of living, et cetera, is going up. I think, again, those people do not necessarily have a lobby group but they should be listened to. I make the amendment.

The Deputy Bailiff :

Is the amendment seconded? [Seconded] The Connétable of St. Peter :

Could I ask the Deputy , would he consider withdrawing his comment about "some bright spark in Treasury" who have worked consistently over several weekends and the evenings to prepare both M.T.F.P. and this Budget? I certainly took it as a derogatory comment.

Deputy R. Labey :

I would not want to cause any offence, so I withdraw that. The Deputy Bailiff :

Very well. It is seconded.

2. Senator A.K.F. Green:

It will come as no surprise to the Deputy that I cannot support his amendment and I will contain my comments to the alcohol part of his amendment. Whether we like it or not, alcohol in this Island is a problem. The level at which it is consumed, whether we like it or not, is bad for health and bad for Jersey. Contrary to what the Deputy 's opinion is, we have the facts that shows a clear link to price and consumption. That is consumption across the board, whether that be in a public house or whether it be at home. I would like to just point out some of those reports to Members. These are no tin-pot organisations as hinted at by the Deputy . The World Health Organisation sponsored a number of reports but I am referring particularly to Alcohol: No Ordinary Commodity 2010 where it says: "Dozens of studies, including a growing number in developing countries, have demonstrated that increased alcohol prices reduce the alcohol consumption, and the related problems, including mortality rates, crime and traffic accidents." That is the World Health Organisation, one of their reports. The U.K. Government's Alcohol Strategy 2012, they go on to say: "There is a strong and consistent evidence that an increase in the price of alcohol reduces the demand for alcohol which in turn leads to a reduction in harm." The Institute of Alcohol Studies in 2016: "Higher alcohol taxes can be justified on the basis of the harm that drinking causes to a wider society alone." The Alcohol Health Alliance U.K. in 2016, that is a coalition of 40 organisations who share an interest in reducing the damage caused by alcohol, they say: "We need to make alcohol less affordable through a tax system." Health First in 2013: "The simplest way to reduce demand for alcohol is to put the price up." I think what they are talking about is what I studied when I did economics, is elasticity of demand.

[11:00]

The States Alcohol Licensing Strategy also goes on to say that there is clear evidence from some of those reports, clear evidence: "The amount of alcohol drunk by the population as a whole is linked to price." The Health Intelligence Unit, which is totally independent, and if it has not moved will be moving to the Statistics Unit to maintain its independence, supports that as well. The facts show that alongside increasing duty, the alcohol consumption has been reducing in our Island. I have to say that I found it quite hypocritical that we want to sell as much alcohol as we possibly can to our tourism industry while we know the damage that alcohol does to society as a whole, not just people living in Jersey. But the fact is that Jersey remains the worst in Europe for alcohol consumption. Our latest Jersey health profile shows that each adult Islander drinks on average 11.5 litres of pure alcohol per person per year. This average amounts to a staggering 29 bottles of spirits per person or 383 large glasses of wine or 506 pints of beer per person per year. Of course, this is an average and

is made up from many people who drink far less or even drink not at all, so this means that more people are drinking above this average amount. This aligns with the information that we have had from the Health Intelligence Unit and Jersey's health profile. It tells us, as the Minister for Treasury and Resources reminded us in his Budget speech, that one in 4 drinkers are drinking at potentially hazardous or harmful levels. There are around 500 hospital admissions each year that are wholly attributable to alcohol. We have a higher-than-average rate of alcohol liver disease and death. In addition to the health costs, of course, something the Deputy did not mention was the social costs of alcohol. We concentrated a lot on the costs but I have seen the devastation that alcohol causes in families. One in 5 of all crimes - not something we have plucked out of the air; fact - have an alcohol involvement while 500 incidents a year of domestic violence have alcohol as part of that incident and that is in the report from the States of Jersey Police. Alcohol is often considered a different commodity to tobacco. There is no such thing as a healthy cigarette; however, likewise, scientific evidence is beginning to show now that even small amounts of alcohol are enough to increase the risk of certain cancers. I do not say this as a messenger of doom or in the belief that my virtuous position as a non-drinker - and I know I am not the only one in this Assembly - makes me better than everybody else. It is just a simple fact that drinking alcohol puts you on the continuum of risk in the same way as the longer and faster you drive a car, the more dangerous it becomes. Unfortunately, Jersey drinks alcohol at a level that puts those people at much higher risk. I have often said that as a government we need to have this income, we need this duty to spend on other matters. But again, let me remind Members, as the Minister for Treasury and Resources said, let us be quite clear, the cost of alcohol on our community far exceeds a duty to support services in managing harm. As the Minister for Treasury and Resources reminded us, the estimated cost of £30 million of harm every year when the duty is £18.2 million, that leaves a £11.8 million shortfall. So, like tobacco, we need to have ongoing actions and evidence of impact in reducing our population's consumption. It is evidence-based. That is one thing I just cannot understand how the Deputy can say that it is not evidence-based when you refer to the reports that I referred to earlier. The States of Jersey Alcohol Strategy recognises the important role of price alongside other measures and these are known to prevent harm. The Deputy also mentioned the lack of consultation. Well there probably has not been a great deal of consultation around the Budget. Most Chancellors just come with their little red box in the U.K. and announce a Budget but there has been considerable - considerable - consultation with the industry around the Alcohol Strategy. The reason you do not have a minimum-price proposal in front of us at any time at the moment is because the industry came together and got the public opinion to stop the minimum pricing in supermarkets, although I do reserve the right to come back to that at some time in the future. That is the reason: the industry were consulted in the strategy on alcohol; they may not have been consulted on the Budget. Studies demonstrate the influence of alcohol price on consumption is very strong. I keep saying that but the fact is, it is called "elasticity of demand" when our price of alcohol goes up, then the amount of drinking goes down. This has been seen internationally and in Jersey. Our most recent alcohol profile between 2000 and 2014 shows that as prices increase by 14 per cent or more generally, then we had a decrease in the consumption in the Island. Despite the claims made by the Deputy , we know that over the same period, the consumption reduces and continues to reduce. In 2000 we had a per capita consumption of 16 litres of pure alcohol per person. This has now been reduced to the latest figure of 11.5 litres linked to price increases. May I remind Members that this improvement is against the remaining fact that we are still among the worst in Europe that have an average of 10 litres per person per year consumption. Young adults particularly, and this is something that is important to me, are price-sensitive. They are going to experiment less. If you think back to when you were a teenager experimenting with life, what you experimented with was, to some extent, dictated to by the amount of money that you had to spend on different things, so young adults are particularly sensitive to price. This age group is known to